Small Justice LLC v. Xcentric Ventures LLC, Civil Action No. 13–cv–11701.

• Decision Date: 27 March 2015
• Docket Number: Civil Action No. 13–cv–11701.
• Citation: 114 U.S.P.Q.2d 1321,99 F.Supp.3d 190
• Parties: SMALL JUSTICE LLC, Richard A. Goren, and Christian DuPont d/b/a Arabian Nights–Boston, Massachusetts, Plaintiffs, v. XCENTRIC VENTURES LLC, Defendant.
• Court: U.S. District Court — District of Massachusetts

99 F.Supp.3d 190

114 U.S.P.Q.2d 1321

SMALL JUSTICE LLC, Richard A. Goren, and Christian DuPont d/b/a Arabian Nights–Boston, Massachusetts, Plaintiffs

v.XCENTRIC VENTURES LLC, Defendant.

Civil Action No. 13–cv–11701.

United States District Court, D. Massachusetts.

Signed March 27, 2015.

Richard A. Goren, Law Office of Richard Goren, Boston, MA, for Plaintiffs.

Maria Crimi Speth, Jaburg & Wilk PC, Phoenix, AZ, Daniel G. Booth, Booth Sweet LLP, Cambridge, MA, for Defendant.

MEMORANDUM AND ORDER

CASPER, District Judge.

I. Introduction

Plaintiffs Small Justice LLC (“Small Justice”), Richard A. Goren (“Goren”) and Christian DuPont d/b/a Arabiannights–Boston, Massachusetts (“DuPont”) (collectively, the “Plaintiffs”) have filed this lawsuit against Defendant Xcentric Ventures LLC (“Xcentric”) seeking declaratory judgment as to the ownership of copyright and alleging copyright infringement. D. 13. The Plaintiffs also allege that Xcentric violated Mass. Gen. L. c. 93A. Id. Xcentric has moved for summary judgment. D. 55 at 1. For the reasons stated below, the Court ALLOWS the motion.

II. Standard of Review

The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A fact is material if it carries with it the potential to affect the outcome of the suit under applicable law.” Santiago–Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir.2000). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir.2000) ; see Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant meets its burden, the nonmoving party may not rest on the allegations or denials in its pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), but must come forward with specific, admissible facts showing that there is a genuine issue for trial. Borges ex rel. S.M.B.W. v. Serrano–Isern, 605 F.3d 1, 5 (1st Cir.2010). The Court “view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor.” Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir.2009).

III. Factual Background

This factual recitation is drawn from the undisputed facts submitted by both parties, unless otherwise noted. Goren is a practicing attorney. D. 56 ¶ 1. Xcentric operates a website called the RipoffReport.com (“ROR”). Id. ¶ 4. ROR is an interactive website providing an online consumer advocacy forum allowing users to post free complaints, called “reports,” about companies and individuals whom they feel have wronged them in some manner. D. 66 ¶ 5.

To post a report on the ROR website, a user must create a free account by providing his or her name, address, posting pseudonym, e-mail address and telephone number. D. 56 ¶ 6. After the user provides details regarding the company or individual at issue, D. 64–1 & 64–2, and writes his or her report, D. 64–3, the user encounters a screen that says “Submit your Report” and “File a Report,” D. 64–5. Below those headings appears a box titled “Terms and Conditions” with a scroll bar running down the right side of the box. D. 64–5, D. 56 ¶ 7, D. 65 ¶¶ 14–16. One of the terms, which is not visible unless a user employs the scroll bar, provides that “[b]y posting information or content to any public area of [the ROR], you automatically grant and you represent and warrant that you have the right to grant to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute such information and content....” D. 56 ¶ 8;¹ D. 65 ¶ 33. A check box appears beneath the box containing the terms and conditions. D. 65 ¶ 17. Next to the checkbox is text that provides, in relevant part: “By posting this report/rebuttal, I attest this report is valid. I am giving Rip–Off Report irrevocable rights to post it on the website. I acknowledge that once I post my report, it will not be removed, even at my request.” D. 64–5, D. 65 ¶ 17. To post a report, a user must check the box and click on a “continue” button. D. 65 ¶ 19. Finally, at the bottom of the screen are several links, including one called “Terms of Service.” D. 64–5, D. 65 ¶ 17.

In January 2012, DuPont posted a report alleging that Goren engaged in improper conduct in his professional and personal life. D. 56 ¶ 11, D. 65 ¶¶ 42, 45. In February 2012, DuPont made a similar report (collectively, the “Reports”). D. 56 ¶ 12, D. 65 ¶ 46. In November 2012, Goren responded by filing an action against DuPont in Suffolk Superior Court for libel and intentional interference with prospective contractual relations. D. 56 ¶ 13, D. 66 ¶ 13. In February 2013, Goren notified DuPont that he intended to waive his claim for damages in favor of an injunction. D. 56 ¶ 17, D. 66 ¶ 17. In March 2013, Goren obtained a default judgment against DuPont. D. 29–3, D. 56 ¶ 16, D. 66 ¶ 16. Goren also obtained orders appointing himself attorney-in-fact for DuPont and purporting to transfer to him DuPont's copyright to the January 2012 report. D. 56 ¶¶ 18, 20–21, D. 66 ¶ 20–21. Thereafter, Goren executed an assignment of DuPont's copyright to himself, which he then assigned to Small Justice. D. 13 ¶ 55, D. 56 ¶¶ 22. In July 2013, Goren sought an amended judgment from the Suffolk Superior Court to include the February 2012 report. D. 56 ¶ 25, D. 66 ¶ 25. In August 2013, the Suffolk Superior Court amended the default judgment and purported to transfer to Goren “all rights in and to ownership of the copyright by [DuPont]” to both Reports. D. 13–3. Goren was again appointed attorney-in-fact for DuPont, allowing Goren to execute an assignment of DuPont's copyrights to himself, and then to Small Justice. D. 13 ¶ 55, D. 13–3, D. 56 ¶¶ 26–27.

Pertinent to the Plaintiff's Chapter 93A claim are two dispute resolution programs offered by Xcentric. If a party contests the content of a report posted on the ROR, he may avail himself of two, fee-based programs administered by Xcentric—an arbitration program and the Corporate Advocacy Program (the “CAP”). D. 56 ¶ 10; D. 65 ¶¶ 79–81. The former program utilizes an arbitration panel to determine if a report contains false statements, which will then be redacted by Xcentric. D. 56 ¶ 10. The latter program requires participants to pledge to perform certain customer service activities and calls for Xcentric staff to monitor reports regarding the participant. Id. The CAP advertises that members' “search engine listings [will] change from a negative to a positive.” D. 65 ¶ 81.

IV. Procedural History

The Plaintiffs instituted this action on July 16, 2013. D. 1. They filed their first amended complaint on September 2, 2013. D. 13. Xcentric moved to dismiss on September 16, 2013, D. 14, which the Court allowed in part, D. 45. The Court dismissed Count III (libel), Count IV (intentional interference with prospective contractual relations), and all bases but one for Count V (violation of Chapter 93A). D. 45. The parties proceeded with discovery regarding the remaining counts, which include Count I (declaratory judgment as to ownership of copyright), Count II (copyright infringement), and Count V (violation of Chapter 93A by Xcentric's CAP and arbitration program). Xcentric now moves for summary judgment. D. 55. The Court heard the parties on the pending motion and took the matter under advisement. D. 87.

V. Discussion

A. Ownership of the Copyrights to the Reports

The plaintiffs and Xcentric disagree as to whether a ROR user is bound by the terms and conditions contained in the box on the screen where the user submits his report. D. 55 at 7–12, D. 64 at 10–13. When the user accesses that screen, the only term visible in the box is an age restriction and some or all of Xcentric's address (the parties dispute how much of the address is visible). D. 56–7 at 7, D. 64 at 3, D. 64–5. Further terms are revealed only when the user employs the scroll bar running down the right side of the box. Among those terms is a transfer of copyright ownership from the user to Xcentric: “[b]y posting information or content to any public area of [the ROR], you automatically grant ... to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute such information and content.”² D. 13–2 at 2. Below the terms and conditions is a check box that the user must select before his post is accepted by the website. D. 64 at 3, 6; D. 64–5. By checking the box, the user agrees that he is “giving Rip-off Report irrevocable rights to post [the report] on the website.” D. 64–5.

Xcentric argues that DuPont agreed to the terms and conditions when he clicked the checkbox, and, therefore, it owns the copyright by virtue of the grant of an exclusive license. D. 55 at 9. The Plaintiffs, on the other hand, argue that Xcentric has failed to show that the contract terms were “reasonably conspicuous” and that DuPont “unambiguously manifested his assent” to the terms. D. 64 at 12 (quoting Ajemian v. Yahoo!, Inc., 83 Mass.App. 565, 574–75, 987 N.E.2d 604 (2013) (alterations omitted)).

There are two types of contracts formed online: “clickwrap” and “browsewrap” agreements. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175–76 (9th Cir.2014). In a clickwrap agreement, users must select a check box or radio button to indicate that they agree to the website's terms and conditions. Id. In contrast, browsewrap agreements do “not require the user to manifest assent to the terms and conditions expressly. A party instead gives his assent simply by using the website.” Id. at 1176 (quoting Hines v. Overstock.com, Inc., 668 F.Supp.2d 362, 366–67 (E.D.N.Y.2009) (alterations omitted)). Clickwrap agreements are generally upheld because they require affirmative action on the part of the user. Van Tassell v. United Mktg. Grp.,...